Gratuity benefit - 10 year old employee of Liaison office? - CiteHR
Dinesh Divekar
Business Mentor, Consultant And Trainer
Bharat Gera
Principal Hr Consultant
Legal Consultancy
+2 Others

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Hi, We are a Liaison office registered in India since 2000, with no commercial activities.
We are now a total of 5 employees and hence not having PF or Gratuity benefit. Two employees have been working with the company for more than 10 years.
I would like to know if we can register for Gratuity benefits and will we get the benefits.
kindly reply

payment of Gratuity Act, 1972:
The payment of Gratuity Act was passed in the year 1972 and covers employees engaged in mines, factories, oil fields, plantations, companies, ports and other such establishments which have more than ten employees. in your case Gratuity will not applicable those people

Dear Swarnalatha,
Alike PF or ESI, gratuity act does not require any registration as such. When a person quits a company and if he/she is eligible for gratuity, company has to pay the gratuity. Now in your case legally you are not bound to pay the gratuity. Nevertheless, it would be improper to leave an long-serving employee high and dry. He has served your organisation and now it is your time to acknowledge his services and go beyond the limits of the law and fulfil the employee-friendly practice.
Dinesh Divekar

Please pay gratuity as advised by Mr Divekar. Just to add one more point that the law does not stop you from giving more benefit to employees than envisaged in the law. So please go ahead & pay.
Dear Swarna
As already discussed earlier, Payment of Gratuity Act 1972 is per se not applicable to your organisation. But if you wish to pay these loyal employees some amount towards ex gratia, you can do so on the lines of the PGA act ie 15 days salary per completed year of service, this is to be paid upon superannuation or separation. There is no legal binding, also there is a gratuity policy from the LIC where you can set aside specified sum each year so that you are not burdened at the end of the tenure of the services of these people. But if they are already 10 years old, you can have other methods to provide the same.

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